A judge at the High Court has dismissed a case that the government acted unlawfully when it extended a licence to explore for gas in Cheshire.
Mr Justice Holgate ruled against the challenge, brought by anti-fracking campaigner, Ben Dean.
Mr Dean (left) had argued that the then Energy Secretary had no power in 2016 to extend the initial term of a Petroleum Exploration and Development Licence (PEDL) held by IGas.
At a judicial review hearing in June, he asked the court to quash the extension (DrillOrDrop report). If his case had been successful, there could have been implications for another 10 licences similarly extended at the same time.
But in a reserved ruling handed down yesterday, the judge accepted the government’s case and awarded costs of £5,000 against Mr Dean
Mr Dean said this afternoon he was disappointed by the ruling. He said his legal team would be examining the judgement in detail before deciding whether to seek leave to appeal.
Licence or contract?
The case centred on PEDL189, which covers the eastern half of the city of Chester, nearby Tarvin, where Mr Dean lives, and other villages including Mickle Trafford and Guilden Sutton.
The area included the IGas coal bed methane site of Dutton’s Lane, at Upton, where the company evicted a protest camp in 2016, before abandoned its drilling plans.
The PEDL was issued in 2008 to Dart Energy (West of England) Ltd, later taken over by IGas. Under the conditions of the licence, the initial term for exploration should have ended after five years in 2013. But the government extended the initial term for another three years to give the company more time to carry out an agreed exploration programme. A further two years were added in June 2016.
Mr Dean, represented by David Wolfe QC, argued that a PEDL was a statutory licence, governed by the 1998 Petroleum Act. The Secretary of State had power to vary conditions only in specific circumstances, he said. The conditions at the time did not allow for a variation to the length of the initial term, so the Secretary of State had no right to make the extension and had acted unlawfully.
He said the licence application made it clear that where companies did not complete the work by the end of the initial term they would lose the licence. The idea that the licence could be extended by a private agreement undermined the EU hydrocarbon licensing directive, which governed the application process.
The government, represented at the June hearing by Richard Palmer, argued that it was well-known in the industry that the duration of an initial term could be extended. This allowed flexibility where a licence-holder could not complete work for reasons beyond its control.
In ruling against Mr Dean, Mr Justice Holgate accepted Secretary of State’s argument that the PEDL was a contract and the terms could be varied by agreement between the parties, like any other contract.
He concluded that a PEDL licence was not governed entirely by the statutory code.
“Rather it is a grant of exclusive rights to search for, bore and get petroleum, in other words a grant of exclusive property rights, which contains the normal incidents of property ownership, in so far as they are not excluded or modified by the terms of the legislation or the relevant licence.
“Those rights include the right to assign the interest created by the licence and the ability of the parties to the licence to agree to vary its terms.
“Neither the legislation to which the Court has been referred, nor the terms of PEDL 189, prohibited the variation which was made by the deed dated 28 June 2016.
“For all these reasons, that variation was lawful.
“I reject the various grounds upon which the Claimant has contended that the deed of variation executed on 28 June 2016 was ultra vires and so the application for judicial review is dismissed.”
Friends of the Earth
Mr Dean’s case was supported by Friends of the Earth. Its lawyer, William Rundle, said today:
“We are hugely disappointed that Ben Dean has lost his case and the threat of fracking still hangs over his community in Cheshire.
“We will be discussing with Ben and his barrister any appeal and will continue to support him at this time.
“But whatever happens, the fight against risky and unnecessary fracking will continue, both in Cheshire and in communities across the country.
“This includes holding government to account when they act unlawfully, as we believed that they did here, because of how they managed this operator’s licence”.